William

Thomann

Fee Giveaway at the USPTO!

Recently, as a part of the America Invents Act, the micro entity status was created. Small entities who qualify as a micro entity will be entitled to a reduction of 75% for certain patent-related fees. However, fees paid to the USPTO are only a drop in the bucket in terms of the overall cost of obtaining patent protection.

The United States Patent and Trademark Office (USPTO) has long given a 50% reduction in certain patent-related fees for those who qualify as a small entity, i.e., independent inventors, companies with less than 500 employees, non-profit institutions such as universities. As a part of the America Invents Act, a new entity status was created, the micro entity status. Those who qualify as a micro entity will be entitled to a reduction of 75% for certain patent-related fees. Recently the USPTO has issued proposed rules dealing with the establishment of micro entity status, which are available here:

In order to qualify for micro entity status, each of the applicants must not have been named on more than four patent applications and must have an income less than three times the average gross income reported by the Department of Labor for the previous calendar year, and has not assigned or licensed the invention (and is not under and obligation to do so) to an entity with an income higher than this amount. The median household income in 2010 in the U.S. was $49,445 according to the U.S. Census Bureau; therefore, all applicants will have to have incomes of less than $148,335 and must not have assigned or licensed the application to an entity with an income higher than that amount. Further, as an exception to the number of patent applications, if, as a result of previous employment, the applicant has assigned, or is under obligation to assign, all ownership rights in any previous patent application, those applications filed during previous employment will not count toward the four applications for that applicant.

Alternatively, and importantly for universities, if each of the applicants have assigned or licensed the invention (or are obligated to do so) to an institution of higher education, and a majority of their income comes from an institution of higher learning, the applicants are able to claim status as a micro entity, regardless of the number of applications filed.

As one can see from the proposed rules, the micro entity status was created to lower patent costs for independent inventors with a “moderate” income who do not file often, and for university researchers.

While the lowering of certain fees at the USPTO is commendable, I hardly think it will make much of a difference. Fees paid to the USPTO are only a drop in the bucket in terms of the overall cost of obtaining patent protection; most costs are incurred with drafting and prosecuting the application. I have never come across anyone who justified a decision not to file an application based on the official fees at the USPTO. On the other hand, my experience has been that many university-owned inventions do not get filed unless there is financial backing from a licensee to pay for the drafting and prosecution and thus, micro entity status will not change this. Further, if there is a licensee, the way I read the proposed rules, micro entity status realistically may no longer be claimed in university-owned applications. Thus, I expect that but for a small number of patent application filings, even when university-owned, micro entity status will not be relevant.